Keep it simple, dimple!

I have a project in Canada that is now, after being banged around by a covey of slick finance people, going to get back to the basic premise of earning money from making and selling biodiesel. The owner intends to bootstrap his operation this way:

 

1) He has located a property that is evaluated at $12 million, he is buying it, on a down market, for $7.5 million. 

2) He will be funding it to the tune of $2 million, a down payment for which he is giving up 15% equity in his company.

3) He gets a loan for the full amount of he property, $12 million, and pays off the $7.5 million. 

4) Uses the remaining cash to purchase one of my units installed on his property, which he bought with all the buildings to house the processors.

 

Ultimately, based on his figures and my equipment, he will be running a 200,000 Ton facility with a 1600 MT a day crushing facility in less than three years based on realistic projections and picking up every legal and illegal subsidy he can grab.

 

The man is a farmer and he taught me a lot of things, the most important is to always keep it simple.  He is not concerned about feedstock because he knows that there will always be vegetable or animal oils around and our equipment will transform almost anything into biodiesel. He is not concerned about buyers because he has three offtake agreements, access to France through my connections and demand building from the USA. He is not concerned about jet fuels, jatropha, algae or palm trees because that is not his business.  He is betting the farm that he bought for an original $2 million down and he, the banks, the investors, the government and the buying public know full well that that is the rock.

 

So I would like to discuss getting back to the basic building block of your project, what is the rock bottom entry point so that I can sell you a biodiesel facility? Is it the land, then you are a rancher and a farmer, rattle those cages and find a piece of land on a jetty with a couple of Quonset huts and a rail yard, make it as big as you can, but as cheap as you can find.  Wangle a down payment, and leverage the hell out of it, why not? It's your land! Everything else can be finessed in some way.

 

You do not need to buy B1 oil for a jatropha contract, there are enough jatropa contracts and palm oil contracts and soy contracts floating around to ensure your 10 million gallons delivered to your doorstep.  Offtake agreements, pick up the phone and get General Petraeus on the line, his whole fighting force is screaming for the stuff!

 

The main reason my Canadian is getting back to basics is because he was shafted by trying to be too smart.  If he had taken the first finance package that came his way he would already have been producing for two years, and have about $17 million in pure profit after paying back all of his debts.

 

Find a guy with your seed money, help him plant it and get rid of him within a year, al the rest is baggage.

 

Yo Truck Makers, Pay Attention!

The Time to Put Biodiesel In Your Tank Is Now!

I think that a product that cuts pollution dramatically, increases truck engine’s efficiency with Ultra Low Sulfur Diesel, weans us off foreign oil in a very small way and can be made from numerous renewable sources, would be in high demand across the US.  That miracle product is biodiesel and in many ways it meets and exceeds all of those expectations. 

Also, strangely enough, it is hailed almost unanimously as a saving technology by schools, unions, truckers, farmers, environmentalists, doctors and a world class country western singer.  And yet, just as strangely, it is not being used nearly as much as all that adulation would imply for a very simple reason, engine manufacturers are ambiguous about the fuel and consequently the large trucking firms hesitate to allow the blends into their fleet.

If the majors won’t buy, the rank and file, and smaller companies hesitate to climb on board. After all, most independent truckers and small fleet owners buy their units from the larger groups, who then turn around and buy new units. Just to allay the suspense, all engine manufacturers allow biodiesel in their engines in blends of 5% or less. Anything above that is tolerated but not recommended, which is a flat shame on them because the benefits are so transparently positive.

So What Is Biodiesel?

First a quick chemistry lesson, biodiesel is not vegetable oil, it’s an actual diesel fuel made from vegetable oil and or animal fats mixed in with methanol, scientifically manipulated under strict temperature, dosage and pressure control in a process called transesterification.  At the end of the process almost all the methanol is separated out, glycerin drops to the bottom and sold and the biodiesel is pumped off. What is called biodiesel is the same color as #2 diesel, smells faintly of olive oil and will blend completely with existing petroleum diesel. It can increase NoX in the higher blends, but not to a noticeable degree, and decreasing CO2 is an added benefit.

The economics of biodiesel are tightly wrapped up in political considerations.  The Federal government will pay the blender one dollar for every gallon of biodiesel he blends into the petroleum/bio mix. Only the blender gets the dough, which is why he can then pass on that savings down the chain.  The trucker will not see a penny of that, so I won’t get into that particular rats nest except to point out that if you removed the subsidies from any form of transportation energy source, we would all be walking at this point.

Suffice it to say that biodiesel will closely follow the price of petroleum diesel and might even be more expensive at times because most biodiesel is sold as a blend of anything from 2% bio, 98% petroleum all the way to 100% bio in special applications. But the core of the biodiesel business is in the 2 to 20% range.  A quick note on nomenclature, B20 is a 20% mix of biodiesel, B5 is 5% etc.  The reason for these blending amounts is based on the supply and demand of feedstocks such as soy oil, chicken fat or other natural fats.  One acre of soy beans will produce 48 Gallons of oil. Simple math indicates that to replace the 34 billion gallons of diesel sold in America last year you would need 700 million acres of soy beans.

Engine Makers?

With all that in mind, how can we explain the attitude of the engine manufacturers towards biodiesel?  It is based partly on bitter experience with bad batches in the early part of the century, it is based on anecdotal reports of engine filters and injectors clogging up and it is based on the simple fact that not all biodiesel is created equal.

In the beginning there was very little control over biodiesel production, individuals and corporations would produce batches of biodiesel in highly individualized production facilities.  There is now a national biodiesel standard just as there is a national diesel fuel standard. As long as the biodiesel conforms to ASTM D6751 and is produced from a reliable facility with ongoing testing services, there should be no problem as far as gelling and clouding. 

There is another drawback to biodiesel due to the fact that it is a good solvent.  In older engines, the first couple of tank fill ups can lead to injector and fuel clogging simply because it is cleaning the fuel circuit, from the tank to exhaust pipe.  The accumulated dirt has to be picked up and delivered to the engine itself.   Mechanics familiar with biodiesel routinely recommend that the filters be changed in the first few weeks to ensure smooth operation.

Soon the car manufacturers will be importing diesel powered examples of their existing models.  The diesel Mini has been available in Germany for the last four years; it gets 600 miles per tank of fuel.  In Europe diesel power competes very nicely and is hardly noticed at the rack. As a matter of fact, 60% of the cars in France run on diesel fuel, and all that diesel has biodiesel in it, that’s the law and those are my lungs!  Here, a small operation in Berkeley still feels the need to “educate” the people who buy their fuel, and biodiesel still has that trendy, tree-hugging aura the industry is trying to shed.

Ecology is not a trucking industry byword.  But engine efficiency is, and running B5 (5% biodiesel) is a great way to keep those pistons pumping because the lubricity of the bio is legendary.  It dramatically cuts down on the friction within the engine. Your truck will last a lot longer and smell a lot better.

Truckers, Make Your Own Fuel!

If there is one thing more troubling to the trucking industry than the rising cost of fuel, it’s the uncertainty of where and when the prices will go up next. At the same time, there are newer considerations that have to be faced, questions about fuel efficiency, ecological considerations, and legislation coming into effect that will mandate newer, less efficient fuels like ethanol in the gas market.

The simple task of converting to ULSD did not go flawlessly as announced since numerous fleet owners noticed that the new fuel was more abrasive than anticipated. Maintenance schedules had to be tightened and fuel managers started looking to ways to protect themselves in meaningful ways.

One solution quickly came to the forefront, biodiesel, with its significantly higher lubricity, ready availability and useful ecological message, became a popular route out of the fuel mess. Then a few bad experiences under cold climates quickly turned the swan back into an ugly duckling. The problems were major because of inexperienced operators running small biodiesel batch processors produced fuel that under winter conditions turned to soap and clogged filters. It was a repeat of the horrors of the early days of ULSD which dissolved some of the rubber lines in the older trucks.

That was then and this is now. Biodiesel can be made efficiently, inexpensively and most importantly reliably in the new modern facilities. The new ASTM standards clearly set down the tests and results that the fuel must meet and the most modern technologies do not even require the use of water, the main source of contamination from soap and a major source of pollution from waste water flowing out of the process.

Even engine builders are coming around to the new reality, if Cummins allows B20 (20% biodiesel blend) in their larger engines, can the rest of the world be far behind? No truck manufacturer completely disallows the blend, but most are hedging their bets at the B5 level. Those numbers could be an endangered species as local, state and federal laws move towards more and more renewable energy legislation.

So what is biodiesel? Quite simply it is the product of a process called transesterification, a fancy word for converting a mixture of vegetable oil or animal fats and methanol into a natural form of diesel fuel and glycerin. What it is not is the pure vegetable oil that some farmers are putting into their tractors. It is a one to one replacement fuel for diesel, it can be run straight (B100) or mixed in with petroleum diesel and it carries a lot of advantages over the petroleum product.

To start with it is much more lubricating than ULSD, in concentration of just 5% engine rebuilders have noticed up to 25% less wear on engine components. In real dollar terms that translates to 25% more miles between rebuilds, which, for major trucking firms may not mean that much since they resell their units on average every three years, but for the independent trucker buying these trucks means money in the bank.. Using biodiesel on a regular basis also significantly reduces all forms of pollution. It is made from natural substances containing no carbon, so CO emissions are reduced. Another advantage is political, it reduces our dependence on foreign oil sources and hands jobs back to the farmers of America.

When Willie Nelson sings On the Road Again, he means in a biodiesel powered truck.

So why is it not more available?

Actually there are pockets of biodiesel all over North America with some states more aggressive than others in promoting its use. But one solution that is already used in Germany is for trucking companies with large regional fleets and even cross-country haulers, to make their own in 3 to 5 million gallon plants strategically located near main shipping and hauling routes.

This is not a light decision, a 5 million gallon a year turnkey facility, will set your company back about $6 million if you need to build it from scratch. The processor itself is around $2 million. A complete facility will require fueling racks, storage tanks for the biodiesel, feedstock and catalyst. But the processes are now fully automated, can be handled by one or two employees, will include a comprehensive lab to ensure that the fuel meets ASTM specs and will allow the owner to set his own production schedule based on demand, price of feedstock and blending demands. Of course if you decide to build a bigger plant, there will be demand for your offtake from other companies like yours.

On the other hand there are many really small 40 to 300 gallon a day units on the market that would allow small trucking companies to make enough fuel over a weekend the take care of business. The only drawback would be finding a suitable source of oil for the machine.

One of the advantages of the new plants is that they allow the use of a multitude of feedstock, from palm oil to chicken fat, and blends of these different products. All this makes for a more flexible production schedule and process. If soy oil is hitting stratospheric pricing, then a simple computer adjustment will change the process for palm, or recuperated restaurant greases. There is a price flexibility built into the system that is not available with petroleum. And the Federal Government will give you a dollar for every gallon you mix in with your regular load.

The time may have come for you to seriously consider installing your own production facility. Not because it will ensure plentiful supplies of first grade fuel for your trucks, but because biodiesel will soon be mandated somewhere on your routes; because biodiesel is an easy fuel to implement unlike some of the more exotic solutions like hydrogen. But mostly you should look into it because it will give you the feeling of doing something very important for your trucks, your drivers and the world in general.

The Changing Face of Biodiesel

The New World of Biodiesel Production
Peter Brown

Imagine a three way chicken and egg question, what came first, the chicken, the egg or the nest? That is the latest conundrum facing anyone trying to get started in the biodiesel business. How do you ensure that over the life of your plant your production will find an open market, access to feedstock, will not contravene local ordinances, and will have a trained and efficient pool of employees and other random thoughts?

Right now, the best answer is to start with the feedstocks because that determines how far and how fast you can adapt to changing market conditions and. Typically feedstock prices represent about 85% of the price of your biodiesel. Never assume that your present choice of feedstock will be available, acceptable or within a reasonable price range when you need it.

Take the case of palm oil; although there are tons of the stuff available all over the world, palm plantations in Africa are for the most part run over and abandoned, still, many countries are now considering legislation to ban palm from their shores because of the food or fuel campaign being so relentlessly pursued in the “civilized” world. In the US for example, no one questions the food versus fuel argument when it comes to soy oil, and soy is so much more useful than palm since it serves as the basis for so many other products, contains one half to a third of the oil compared to palm and is a whole lot healthier. As a biodiesel producer, be aware that ecologists in some parts of the world are not in favor of using existing plant and animal life for transportation purposes.

On the other hand, a small country like Liberia could be completely energy independent using only locally available palm oil, a cold crushing facility and a medium sized biodiesel plant. Fully 80% of their potential production is overgrown through neglect, wars and disease, but what remains could power generators, trucks and buses and revive the economy replacing $18.00 a gallon gas with $1.45 biodiesel.

Predicting new feedstocks is an arcane science, jatropha came out of nowhere, and there is much talk of camelina or algae. Will the new processors be able to handle these newer oils? Will animal fats be cheaper? How will they be prepared for production? We only recommend a multi feedstock processor because as long as the chosen feedstock meets the basic chemical composition criteria, you can probably make biodiesel out of it without too many constraints. But be aware that a “small” change can hide a lot of rework, so if the processor is flexible then the programming can adapt the catalyst, feedstock, and methanol equation quite easily to meet your immediate requirements. If not, plan to spend quality time with your plant designer.

Even the new oils may come with a high price up the learning curve. Jatropha is not the easy conversion we all thought it would be and we are hearing stories from places like Mozambique and Peru that the oil itself needs careful monitoring, let alone harvesting and crushing. It may be cheap, but there may be a reason for that. Algae oil is slowly appearing in experimental reactors and ponds, but the jury is still out on the ideal mono-cell, the way to harvest the oil and how to create a sustainable economic model for the colorful scum.

Lowering the feedstock price is an essential tactic for the new installation and one way to do that is to blend different oils so that the FFA and other levels are within acceptable transesterification limits. Not all units can handle blends, and some blends can be exotic like chicken fat and soy, or coconut and palm. These are actual requests that EMT has fielded from places like Fiji and Liberia, places where mistakes will be hard to correct and changes impossible to implement. The term blending does not mean mixing the various oils as they head into the processor, it means a homogeneous blending of all the components so that the output does not contain pockets of one or the other feedstock, and that blending comes with a price. Blending is a centrifuge or two beavering away ahead of the processing plant.

As far as exotic oils and strange blends, wise plant manufacturers will protect themselves in one of two ways. The first is to test run the plant for final delivery on their approved oil, most often virgin soy, and provide the buyer with the keys to the plant only after it has run on that oil for a specific number of hours producing ASTM or EN standard fuel. The second will request a sample of the oil that will be run in the plant and have enough adjustments built into the system to allow for other oils to be used. Always get the second option because there are many ways that the future of the facility will hinge on the ready acceptance of alternate feedstocks. But again, most of the plants built over the last four years are probably running on a different feedstock than originally planned, and high on that list are WVO and animal fats.

Feedstock flexibility and availability are not the only considerations, there are volume considerations. The facility is expected to run continuously at near capacity, but what if there are climactic considerations, availability issues, local ordinances and other reasons to slow down production? What if, as happened recently in a facility in France, for religious reasons a 100,000 ton unit was not allowed to blend non-kosher animal fats because the glycerin offtake would be unsellable in Africa? That is where the ability to run portions of the plant is an essential consideration. The modern modular facilities have multiple production lines. This has two advantages, the first was just discussed, and the second is that there can be no single source failures leading to a complete system shutdown with the attendant horrors of an idle plant while the single large processor is repaired. Continuous production on multiple lines can be slowed or even stopped on two of the lines for whatever reason, and startups are simpler because the facilities can be brought on line sequentially. Each line can be tailored to perform specific tasks to meet clear goals. One can be highly productive for glycerin offtakes, the others strictly ASTM biodiesel.

Robert Luiten, CEO of Zenergy International Inc. started his whole operation with a clear idea of what biodiesel and the energy world going forward would entail. “We decided right from the start that every one of our facilities would enable flexibility and ability to act on opportunities to ensure profitability at all times. We will be opening world scale facilities in France, Malaysia, both sides of the United States, South America and possibly Africa with a clear understanding that all our facilities will have an underlying mission of allowing any feedstock at any time and without national limits. Each facility will be ecologically clean, have a small footprint, be standardized across the globe, allow for expansion to meet specific needs and will be logistically optimized. There is no other way to meet the challenges coming at us in the biodiesel market.”

Feedstock issues are the first step, processor technology issues are another. But having settled them, you are going to decide what size facility you will need. Usually the best options is to determine your optimal feedstock availability and add 20% more capacity to ensure that in year 5 of operations you will have the ability to meet increased demand. The increase may tax your available financing, but it will be worth it in the long run. We have watched a number of facilities built around the world and very often the startup is hardly completed when the owner applies to double his capacity. It really makes no difference if the plant was a 10,000 Ton unit or a 100,000 ton unit, the need to grow is universal, the demand for product steadily increases.

Also, give yourself credit for a steep learning curve; what was an insurmountable obstacle when you first started your project is now random and routine. Your new knowledge will allow you to negotiate better prices, put you in contact with local, national and international businesses, increase your credit limit and provide a host of new services you never knew existed.

But if you really are unable to swallow the 20% increase, a better tactic is to drop down 15% in size to locate yourself in a more comfortable zone with a facility that allows doubling in size with little additional inputs further down the line. Discuss this with the plant designer so that he can incorporate redundant sections, larger capacities and adequate foundations to support the eventual increase. Also make sure that the design you select can be upgraded in an easy operation that will not require new buildings, new controls and additional employees. Stacking key components and over sizing blenders, dryers, pumps and piping is best done earlier rather than later.

Other roadblocks to getting the most for your money include a too small site, access restrictions, and local ordinances. This is where long term planning comes in handy.

Locating the plant in relation to a number of factors for example can be crucial. Your plant site will play a key role in what type of facility you will be running. In the US we are seeing a move towards smaller regional facilities located not too far from specific feedstocks, within walking distance of a crusher and serviced by a rail spur with load and offload racks. These operations address the crucial issue of feedstock and biodiesel transportation, and are built and operated by a local or regional group. Financing is often from a local branch of a large bank and the whole operation rapidly becomes a source of community pride, jobs and taxable income.

At the opposite end of the spectrum, and not competing with the local facility, are the huge, multinational companies who build larger facilities in or near ports because they have few illusions and intend to tap into the international feedstock pool immediately. Where you place your plant is not related to size or anything, but be aware that the location can influence a lot of decisions down the road.

A final note on what is really a very shallow review of the changing face of biodiesel production; make sure that you understand every aspect of your new venture. From legislation and incentives on the books, upcoming rules and regulations, public opinion trends, who your friends are and will be, automotive buying habits, shipping conditions, ecological impacts and other trends. Biodiesel people are a very open and friendly group as a whole, do not hesitate to call and ask, there are websites, government agencies, corporations and journalists waiting for your call.

Make the call, and then build the plant!

Marketing Biodiesel

The Marketing Of Renewable Energy

Peter Brown
European Marketing Tools

The next big revolution will come when we all realize that there is not enough energy available to ensure that we can all access our fair share.
The definition of fair share varies from country to country and even within countries, it varies widely depending on who is in charge, who is on top and who is most needy. In the United States, there is no restriction on buying gas, electricity and water. There is, according to the equation, enough for all. There is enough so that we can indulge in conspicuous consumption with blatantly oversized vehicles, houses and toys.

The problem is that for every gallon of gas or pound of coal, someone will be going without. Quite simply, there is no longer enough for all to have as much as they want.
Enter the economy of alternate energy sources, enter the radical idea that what one person can save is not for his own benefit but to add to the dwindling pool. There is no equivalent in our society that explains the concept of finding sources energy to ensure that the greedy can remain gluttonous.

Solar power is a rather fragmented example of this idea. Putting extremely expensive technology on the roof that will convert the rays of sun into electricity is easy to understand. But the payback on the investment is almost staggeringly slow, supported by generous and not so generous subsidies and tax breaks, the homeowner may one day pay back the cost of his installation in reduced electricity bills. The catch of the meter running backwards is that most of the time the meter runs forward, and revs up at night.
So why do it? We do it because the cost of not doing “it” is even higher. Solar power on the roof is a bold statement that the owner will become a contributor, not a consumer. The act of buying gas is a simple necessity; the act of making biodiesel fuel and running the car on it is an entirely different statement of non-cooperation.

Face it; hybrids are no-brain substitutes for existing cars. There is no pain in driving a Prius, which gets marginally better mileage than a raft of classic cars from the past; remember that the 1996 Geo Metro gets better mileage than the Prius, the Mini 850 was a fuel sipper. So the point of the Prius is that the owner continues to consume, and will add a stupendous pollution bill to the last owner of his car, fifteen years down the line when the batteries run down forever. But for the time being, he is riding in his unique statement. The challenge of biodiesel is to channel his attitude into buying a diesel powered car and insisting on biofuels. The challenge is huge

The business of renewable energy lies in ensuring that consumption of any form of energy is replaced by a like amount of available energy from a renewable source. Petroleum products are wrenched from the ground at ever increasing depths. The oil wells in Kuwait stretched into Iraq, which started the first oil war. What is pumped from the ground is not replaced; it is shipped, refined and burned. The result is mobility, pollution and less available energy.

A solar panel just sits there; every photon that hits the silicon cell generates a tiny pulse of energy. Although the sun is not an inexhaustible source of energy, by the time it runs out, we will have other, bigger problems to contend with. A river, well-managed and producing electricity through pelton turbines is fed by a renewable cycle of water to rain and back again. It too is a pure form of renewable energy, although we are going to heroic lengths to keep the electrons flowing from such remote areas as the James Bay, or the Chinese Gorges.

In the PR world, we have several ways to describe actions that lead to sales. There is the direct approach, which is an invitation to consume, and the indirect approach, which drives the consumer to want to consume. The alternate energy scene is right now mired in the first approach because the learning curve in America for biofuels has barely been touched. There is a fear of embracing what appear to be radical problems. Biodiesel is a clear case in point; will it damage my car? (no) Is it more expensive? (Not really), Do I need to make costly conversions? (no) and so on. On the other hand buying a hybrid is so much easier, I just pump gas and drive off, right?

So the first step is to educate the consumer, because we are a free society and we cannot just impose our decision on him. But our average consumer is not well educated in energy matters, why should he be? For years he has spent very little per mile for his transportation, very little for all his energy needs in general. Now the equation is changing, now he needs to think about things that Europeans have been debating since before WW II. A Belgian knows to the liter how much gas his car uses. He instinctively knows when it makes sense to take the train, or the car.

But Europeans have clear alternatives, trains that run on time, and can drop a passenger in the heart of the city in many ways faster than the airplane can. In the US there was a clear choice to eliminate that form of public transport to the advantage of the automobile economy. They also have very expensive petroleum products.

With our restricted infrastructure, the only real alternative to the car is… the car. So we are compelled to seek alternate energy sources to keep the individual automobile on the road. At the same time we can expand the use of biofuels into energy production like running generators, heating in home furnaces and other non-transportation situations.
Enter biodiesel, a simple solution to a complex problem. Take available organic materials and convert them to fuel.

Our industry is in transition because our consumers are buying our fuel for the same reasons that they would buy a Prius. The novelty of actually doing something that is not mainstream to enhance his image. Education is a hard road to go down, it entails removing the mystique of the alternate fuel label to appeal to a much greater public, and an increasingly ignorant buyer.

The present campaigns to sell the concept of biodiesel may actually be harming the sale of the product. We have enough buyers to meet our output, but unless we overcome the “special status” effect of our campaigns and our products we may not be able to go to the next level. The ethanol producers are doing a great job in getting the point across that their alternate fuel is the wave of the future. They have become accepted and mainstream, and they have not discussed the pros and cons of the product except to say that it is clean, available and cheap. They have no controversies, no possible negatives. The consumer is buying the argument and the fuel. Plants are being built all over the Midwest and the large petroleum companies are starting to take notice.

In a sense even a Prius owner will not question if his gas comes from Venezuela, Iraq or Nigeria. When Biodiesel reaches the stage when he does not even care what brand of biofuels is going into his tank, that’s when biodiesel will have achieved big dog status in the energy club.

Show Me The Money!!

Walking the floor at the NBB last week, speaking with exhibitors, buyers and sellers, and the broad Biodiesel community in general, one topic was raised time and again: the parlous state of project financing.

While the US banking system is sitting on billions of dollars of bailout money, according to this CNN report (http://money.cnn.com/news/specials/storysupplement/bankbailout/), very little of it is flowing into the biodiesel world. Business plans are drawn up, repayment schedules are drafted, blender’s credit calculated, provisions are made for alternative feedstock, and demand for biodiesel is proven with signed offtake agreements. It is all there, and it is all in place. What is missing is the cash.

The NBB, advanced several reasons for biodiesel producers to be bullish in 2011; fulfilling the requirement of RFS2 means soaring sales, and the renewed tax incentive has improved the bottom line. Plus higher oil prices and pipeline access for B5 will help revitalize the industry. All true, but where is the money?

Over the last two years, numerous plants have been mothballed. And many no longer meet EPA and other regulatory requirements. It will cost money to get them restarted. According to the attendees, that money is not available. And they should know. They have tapped into any financial source they could identify, from government grants to offshore lenders, all without success.

Show me the money was the refrain, and, in case after case, the response was, no money is available.

The worst part of this black hole credit void is the bottom feeding predators that it has created. For a modest monthly retainer (ranging from $3,500-$20,000 per month!) financial brokers will peddle a project to present projects to “Russian” petroleum investment groups interested in clean technology, or to “Swiss” groups that supposedly have “Chinese” money to create biopure production companies. Since these brokers are not earning fees on funded loans, obviously they have to make money somewhere! Of course there is no guarantee that any actual funding will result. Biodiesel project developers, who cannot get any traction with conventional banks, and who have already put out hundreds of thousands of dollars in preliminary project costs, are proving to be easy prey. Not only are their wallets much lighter, but they are left, once again, asking “Show me the money?”.

Where is the money? It was reported here that $31.2 billion was put in play to finance 93 renewable energy projects in 2009. That is an impressive number and yet the biodiesel share of that amount was less than $3 billion. Over the next few years, much larger amounts will be required to meet the mandated B5 requirements and that funding appears to be missing. Where is the money going to come from?

We cannot expect venture capital to step into the void. It is funding advanced new technologies, whereas the value of a biodiesel project is not in its technology, which is static, but in the production figures of each facility that starts producing biodiesel, providing jobs and making impressive or not returns on investments.

American regional banks may provide the solution. As a recent Reuters news story pointed out, they are the logical solution for renewable energy projects. They can do private placements for equity, own 5 percent of the companies in voting stock, work with local communities to develop jobs and carry out job creating activities and funding community development (including being a Community Development Entity), and arrange for municipal debt. And they actually could show the money if they knew what it was for. Biodiesel has had its public image tarnished. It has become conventional wisdom that biodiesel will increase the price of food; reduce the jungles of the Amazon , and require more energy to produce than is actually provided.

So faced with a clean ethanol plant costing $100 million and more and an environmentally suspect biodiesel facility, the cash goes to the alcohol.

On the other hand, the development of a biodiesel facility is a fairly small investment compared to an ethanol, nuclear, solar or any other energy producing plant. If the planets align themselves correctly, local financing and government loan guarantees could lead to the development of a large number of new medium sized biodiesel plants over the next few years. But what do we need to do in order to be shown the money now?

One thing everyone agreed with is the need to change perceptions of our industry, products and benefits. We need the NBB and other national Biodiesel Boards worldwide to tell the real story of biodiesel to the world, and the banks. And the story will have to cover all the bases starting from the need for biodiesel through what it is, what it does, where it comes from and why it fits into the real world of business.

Someone once said that there is nothing more skittish than a million dollars. So the answer to show me the money is probably come out come out wherever you are. The president has agreed that renewable energy is worth pursuing, so we ask the President, show us the money! We know that banks have been given trillions of dollars to refloat the economy; we need to go to them and ask them to show us the money. We know that politicians are pushing for biodiesel for a number of reasons, from small projects in the farming communities, to large projects in ports around the world, the politicians gain votes and credibility so they need to show us the money.

The point that was made over and over at the NBB is that we, the biodiesel industry, should not be the only ones to ask for the money, it must become a common refrain to generate the financing to create the facilities the world needs.
Those who show us the money must understand the benefits beyond the ROI.
The local banks can become local heroes. The politicians can bank on being reelected; the diesel driver can make a statement by insisting on biodiesel. The people waiting for local jobs, the improved environment, the better running trucks, the new lubricants, clean heating oil, large ports where neighbors can breathe easier. School buses where children need not fear asthma, all of them must insist that they be shown the money.

We need to be lobbying policy makers, and making alliances with environmental groups like the Sierra Club, every group that supports clean air and clean tech must be shown the money because without the money all of that goes away.

There was an undercurrent of anger and frustration at the NBB conference because with all the optimism expressed at the show, there was little faith in seeing the money any day soon. And that must change before biodiesel becomes as acceptable in the US as it is in Europe.

More than one attendee told us exactly where the money was; in Brazil billions of dollars are coming directly from the Government to support that country’s road to energy independence. Will it come to that in Europe and North America where the refrain remains, show us the money, before it all goes away once again?